Archive for
August, 2010

The thought might seem absurd but when stress tested, there could be several advantages of hiring heavily during a recession. A company’s success depends upon how competent its staff is and one needs to realize that any compromise on quality of employees can have disastrous impacts. So I thought, why not discuss this theory?

Inflation is a rise in the general price level of goods in an economy over a period of time. It basically means an erosion of the purchasing power of money. It is mainly calculated either by using wholesale price index (WPI) or consumer price index (CPI). WPI is calculated on a basket of goods sold in wholesale market whereas CPI is estimated based on the average price of consumer goods and services brought by the end consumers.

India is one of the 24 countries that use WPI to calculate the inflation rate. Despite the global use of CPI in calculating inflation, India continues to use WPI. The possible reasons why India still prefers using WPI are

Coverage: WPI’s basket includes 435 commodities and its coverage is wider than CPI as it measures inflation at each stage of production while consumer price index measures inflation only at the final stage of production

Frequency of availability: WPI is available on weekly basis whereas CPI is calculated on monthly basis

Lack of infrastructure: Setting up the infrastructure at the various data points in the consumer chain is expensive

In the last decade, many steps have been taken to disinvest public sector enterprises in India, both in terms of listing central public sector enterprises companies on the stock market and selling controlling interest. After a lull, disinvestment is now back on the UPA government’s agenda. The main rationale for disinvestment is the increased efficiency of utilization of resources of the economy, both labour and capital. Even partial privatization, with the government retaining control, has yielded improved productivity. Disinvestment of profit making enterprises by public offering of shares is desirable as it takes India towards a greater mass of companies with dispersed shareholding and avoids concentration of economic power.

Corporate Social Responsibility (CSR) has been a part of India for a couple of decades now. The Tata’s and the Birla’s have been imbibing the case for social good through their operations long before CSR became a popular cause. A very recent example of it would be what Ratan Tata did for the 26/11 victims. It would be interesting to note that Bharti, Infosys, ITC have all been making notable efforts. The 2010 list of Forbes Asia’s ’48 Heroes of Philanthropy’ had 4 Indians.

However, in my opinion CSR in India is in a very nascent stage. It is still one of the least understood initiatives in the development of India. It is followed by a handful of public companies, not because they have realized their responsibility towards the society, but because it is dictated by the very basis of their existence. According to Indiatimes, a few private companies with international shareholding follow CSR as this is the practice followed by them in their respective foreign country. Therefore, the situation is far from perfect as the emphasis of most of the companies is not on social good but on visibility.

The question is, ‘Are the companies willingly indulging in CSR? Or there is another motive?’ This debate has been on for over a decade now. By making it mandatory, another dimension has been added to the argument, i.e. would it even be CSR anymore?

More than three billion people live in poverty around the world, but millions are managing to raise their living standards to some degree, thanks to microfinance. Even so, there’s plenty of scope for scaling up the current model of micro lending to help others.

The social goal pursued by the microcredits gave them an aura of respectability that they have maintained over the decades. However, with the passing of time, critical voices have also emerged: Questionable aspects, such as the high interest rates charged by the microcredits, has led some to think that they are not being true to their social function and ethical content.